It took a little convincing and Starbucks but I’m so appreciative that Niko agreed to spend some time with his favourite sister (pre covid-19) to answer a few mortgage questions!

 

How long have you been a mortgage broker and what company do you work for? 

I’ve been a mortgage broker for 5 years and I work at Tribeca Mortgages which is under the parent company of Dominion Lending Centres. Our office is located in the beautiful neighbourhood of Cadboro Bay in Victoria, BC.

 

What can harm a client’s credit score that they may not be aware of? Alternatively, what are simple steps to increase your credit score? 

The most common problems that harm someone’s credit score are late visa payments, late phone bill payments, going over credit card limits, and not paying off high balances. Another mistake I see people make is when they have active credit cards with small balances that they have forgotten about. As a result, they have missed consecutive payments.  Even something as small as a $10 balance when left unpaid over consecutive months can have a negative impact on your credit score. If you can, it’s a great idea to automate your credit card and utility payments so that you don’t miss a payment.  

 

Another helpful tip (it does take some will power) is instead of having a small credit limit and using your maximum credit limit every month, it would be better to increase your credit card limit but keep your spending the same.  As a result, your credit score will improve.  

 

Apparently, the sweet spot is to spend about 20% of your credit card limit or line of credit limit.  For example, say your current credit card limit is $10,000, you should try to spend only $2,000 each month.  And if you can, try your best to pay it off right away. It will likely take a few months to improve your credit score after you implement the changes.

 

How does credit score affect a client’s ability to get a mortgage? 

The majority of lenders, especially the big banks have a minimum credit score requirement for their applicants.  In order to get the best interest rates available, it’s important to have a high credit score. If you fall below a certain score (depending on the lender’s criteria), you may have to use B lenders (as opposed to A lenders) who will require you to pay higher mortgage interest rates. 

 

What criteria is used to determine if someone can qualify for a mortgage? 

This is a complicated question to answer since each client is different but the basic criteria includes a client’s income, gross debts, and total debts. Gross debts are all liabilities including credit card payments, car loans, student debt, lines of credit, and existing mortgage payments. Total debts include all previously mentioned liabilities above along with any existing property taxes, utilities and/or strata fees from any properties you currently own. Keep in mind that any properties owned have to be declared on your mortgage application. It’s best to talk to a mortgage broker early on in your search process to go over your specific needs and objectives.

 

That’s all for now – thank you for your answers Niko! Next week I will have Part 2 with Niko where he provides helpful tips for first time home buyers and how Covid-19 is impacting the mortgage industry.

Niko can be reached at niko@tribecamortgages.ca or at https://www.tribecamortgages.ca/ and he would be happy to answer any of your questions!